Effective for the 2015 proxy season, all non-venture issuers reporting in nine Canadian Provinces and Territories must disclose the representation of women on boards and in senior management. These new obligations follow a comply or explain why model, and the regulators are  watching – and so are actual and potential investors.

5 NEW DISCLOSURE OBLIGATIONS

Effective December 31, 2014, the securities regulatory authorities in each of Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, Manitoba, Northwest Territories, Nunavut, Quebec and Saskatchewan amended National Instrument 58-101 Disclosure of Corporate Governance Practices. The amendment imposes 5 new disclosure obligations, specifically related to women on boards and in senior management, for non-venture issuers reporting in these Provinces and Territories.

Starting with the 2015 proxy year, they must disclose this information in the proxy circular or the annual information form filed following its financial year ending on or after December 31, 2014:

1. Policy. Whether the issuer has a written policy relating to the identification and nomination of women directors. If it doesn’t, it must explain why it hasn’t created one. If it does have a policy, it must summarize:
   • the policy’s  objectives and key provisions
   • the measures the issuer has taken to ensure it has effectively implemented the policy
   • the issuer’s annual and cumulative progress in achieving the policy’s objectives
   • whether, and if so how, the board or nominating committee measures the policy’s effectiveness.
2. Candidates. Whether the issuer’s board or nominating committee considers the level of representation of women on the board and in senior management when it’s identifying and nominating candidates for the board and executive officer appointments. If it doesn’t consider this, it must explain why not.
3. Targets. Whether the issuer has adopted a target (either a number or percentage) for women directors and executive officers. If it has, it must disclose the target and the annual and cumulative progress it has made in achieving them; if it doesn’t, it must explain why it hasn’t adopted one.
4. Representation. The number and percentage of the issuer’s women directors and executive officers.
5. Board Space. Whether or not it’s adopted term limits for board service and if it hasn’t, why not (the point is to make space available on boards for women to occupy).

WHY COMPLY

This particular obligation follows the “comply or explain why” model. The securities regulators monitor circulars for compliance with all disclosure obligations, including these new ones, assessing the robustness of the disclosure – and the explanations for non-compliance.

But they’re not the only ones watching: many investors – actual and potential – are watching too. The Canadian Securities Administrators expressly noted these amendments are intended to “increase transparency for investors and other stakeholders regarding the representation of women on boards and in senior management of non-venture issuers … to assist investors when making investment and voting decisions.”  More and more investors follow internal policies or guidelines that restrict investments to issuers that comply with securities regulations, including disclosure obligations like these. So issuers that want their money will need to comply or give a darn good reason why.

Each Province and Territory that adopted this amendment has notice of it posted on its relevant website. Read the Ontario amendment to National Instrument 58-101 Disclosure of Corporate Governance Practices.

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Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Corporate Governance & Compliance Team to discuss this topic or any other legal issue.

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